Form CRS Updates in 2020 (Part 2)

Investment Advisers Act: Know the Rules or Pay the Price

Knowing firm requirements as set forth in the Investment Advisers Act is essential, and learning from the mistakes of others in this area can be a valuable and motivating tool for striving for compliance in the financial services industry. In an atmosphere where Chief Compliance Officers (CCO) are being added to disciplinary proceedings, learning and taking immediate corrective action is the name of the game. No longer is the firm the only name blasted across SEC complaints; regulators will ensure that individuals are equally held responsible. Read More…

Best Execution

Best Execution Violation Takeaways

Disciplinary actions are often the best way to answer questions such as “how did this happen” or “what can we do differently”. Recently, a member firm named Robinhood Financial LLC was fined $1.25 million for best execution violations. Their shortcomings can provide valuable takeaways to assist other firms in building and solidifying their compliance program.

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Footnote 74

Disciplinary Actions by FINRA: April 2020

FINRA publishes a monthly review of disciplinary actions taken against both firms and individuals. These disciplinary actions are useful tools to look for trends in violations and other sanctions. These trends can assist you in identifying weak areas in your firm’s compliance programs or surveillance. Below is a list of a few key actions from last month.

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FINRA Disciplinary Actions

FINRA Disciplinary Actions from January 2020

The Monthly Disciplinary and Other FINRA Actions report from January may provide a glimpse into the conduct by Firms and individuals that result in disciplinary proceedings. For Firms, a failure to evolve a program can be costly. For individuals, failure to disclose despite Firm-acknowledged requests may result in FINRA sanctions.

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Recent Enforcement Actions from FINRA

As summarized below, FINRA recently announced some recent enforcement actions against member firms that we wanted to share with you.  We have selected these specific cases to share as we feel these are very important areas of compliance within a broker-dealer.  More importantly, each of the examples summarized below were easily preventable.  Firms must ensure that its personnel receive adequate training and have the requisite experience when assigned supervisory responsibilities, and also have an obligation to ensure its policies and procedures are being followed. Read More…

Nontraditional Exchange-Traded Funds: Suitability Guidelines

On June 8, 2016, FINRA published a News Release to announce that it had fined Oppenheimer & Co. Inc. (“Oppenheimer”) $2.25 million for failing to reasonably supervise transactions in nontraditional exchange-traded funds (“ETFs”). Through this disciplinary action, FINRA has made its expectations abundantly clear: A broker-dealer offering nontraditional ETFs must establish, maintain, and enforce an effective system for supervising transactions in these complex products. In this blog post, we identify what Oppenheimer did wrong so that your firm does not make the same mistakes. We then describe how your firm can use “suitability guidelines” to mitigate the risk of unsuitable recommendations involving nontraditional ETFs.

What Are Nontraditional ETFs?

The term “nontraditional” is commonly used to describe ETFs that are leveraged, inverse, or use other complex strategies to gain access to an index or underlying asset class. Nontraditional Read More…